UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from to
Commission File Number: 0-13409
LEGALOPINION.COM
(Exact name of small business issuer as specified in its charter)
Nevada 87-0550824
(State of Incorporation) (IRS Employer Identification No.)
TWO UNION SQUARE, 42ND FLOOR, 601 UNION STREET, SEATTLE, WA 98101
(Address of principal executive offices)
(206) 652-3390
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since
last report.)
As of June 30, 2000, the registrant had 32,441,942 shares of common stock,
par value $.001 per share, outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LEGALOPINION.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
$ UNITED STATES
JUNE 30, 2000 DECEMBER 31,1999
(UNAUDITED-PREPARED
BY MANAGEMENT)
--------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
CASH $ 2,046 $ 23,080
PREPAID EXPENSES (NOTE 3) 3,600 10,000,920
--------------------------------------------------------------------------------
5,646 10,024,000
FIXED ASSETS (NOTE 4) 28,291 25,558
--------------------------------------------------------------------------------
$ 33,937 $ 10,049,558
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 108,438 $ 141,979
LONG -TERM DEBT
STOCKHOLDERS' LOANS (NOTE 5) 427,419 527,899
--------------------------------------------------------------------------------
535,857 669,878
STOCKHOLDERS' (DEFICIENCY) EQUITY
CAPITAL STOCK
AUTHORIZED:
200,000,000 COMMON SHARES WITH A PAR VALUE
OF $0.001 PER SHARE
ISSUED AND OUTSTANDING:
32,441,942 AND 31,083,942 COMMON SHARES 32,442 31,084
ADDITIONAL PAID-IN CAPITAL 12,134,158 10,000,516
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (12,668,520) (651,920)
--------------------------------------------------------------------------------
(501,920) 9,379,680
================================================================================
$ 33,937 $10,049,558
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF LOSS
$ UNITED STATES
(UNAUDITED - PREPARED BY MANAGEMENT)
FROM INCEPTION
(APRIL 7, 1999) TO 6 MONTHS ENDED 3 MONTHS ENDED
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000
REVENUE
DIRECTORY FEES $ 9,295 $ 8,856 $ 4,981
9,295 8,856 4,981
EXPENSES
ACCOUNTING AND LEGAL 176,962 97,539 60,863
ADVERTISING AND PROMOTION 11,351,820 11,283,337 8,276,541
ATTORNEY DIRECTORY ENROLLMENT 116,882 58,432 23,607
COST OF RECAPITALIZATION
(NOTE 2) 100,000 0 0
CREDIT CARD COMMISSIONS 5,183 2,281 1,275
DEPRECIATION 8,180 3,884 2,005
FOREIGN EXCHANGE GAIN 1,778 1,528 1,929
GENERAL AND ADMINISTRATIVE 41,886 29,659 16,306
INVESTOR RELATIONS 337,929 309,455 281,412
MANAGEMENT FEES PAID TO RELATED PARTY
(NOTE 6) 107,285 46,646 7,998
TRAVEL AND LEGAL CONVENTIONS 63,717 36,201 27,892
WAGES AND EMPLOYEE BENEFITS 80,531 80,531 74,476
WEB-SITE AND TECHNOLOGY
MAINTENANCE 285,662 75,963 46,829
================================================================================
12,677,815 12,025,456 8,821,133
NET LOSS $ (12,668,520) $ (12,016,600) $ (8,816,152)
WEIGHTED AVERAGE
NUMBER OF SHARES 23,244,118 31,488,275 32,248,619
LOSS PER SHARE $ (0.55) $ (0.38) $ (0.27)
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
(Unaudited - Prepared by Management)
FROM INCEPTION
(APRIL 7, 1999) TO 6 MONTHS ENDED
JUNE 30, 2000 JUNE 30, 2000
--------------------------------------------------------------------------------
OPERATING ACTIVITIES
NET LOSS $ (12,668,520) $ (12,016,600)
ITEMS NOT-INVOLVING CASH
ADVERTISING PAID WITH
SHARE CONSIDERATION 11,200,000 11,200,000
DEPRECIATION 8,180 3,884
CHANGES IN NON-CASH WORKING CAPITAL
PREPAID EXPENSES (3,600) (2,681)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 95,288 (33,541)
================================================================================
(1,368,652) (848,938)
FINANCING
STOCKHOLDERS' LOANS 1,125,669 597,770
SHARES ISSUED FOR CASH 236,750 236,750
--------------------------------------------------------------------------------
1,362,419 834,520
INVESTING
ISSUANCE OF SHARES 45,000 0
PURCHASE OF FIXED ASSETS (36,471) (6,616)
--------------------------------------------------------------------------------
8,529 (6,616)
CHANGE IN FOREIGN CURRENCY DENOMINATED
CASH BALANCE (250) 0
INCREASE IN CASH 2,046 (21,034)
CASH, BEGINNING OF PERIOD 0 23,080
CASH, END OF PERIOD $ 2,046 $ 2,046
SUPPLEMENTARY INFORMATION:
INTEREST PAID 0 0
INCOME TAXES PAID 0 0
NON-CASH INVESTING AND FINANCING ACTIVITIES:
ISSUANCE OF CAPITAL STOCK FOR
ADVERTISING SERVICES 11,200,000 1,200,000
ISSUANCE OF CAPITAL STOCK UPON CONVERSION OF
STOCKHOLDERS' LOANS 698,250 698,250
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Equity
$ United States
Period from date of Inception (April 7, 1999) to June 30, 2000
(Unaudited-Prepared by Management)
--------------------------------------------------------------------------------
ACCUMULATED
ADDITIONAL DURING THE TOTAL
NUMBER PAID IN DEVELOPMENT STOCKHOLDERS
OF SHARES AMOUNT CAPITAL STAGE EQUITY
--------------------------------------------------------------------------------
ISSUED FOR CASH ON
APRIL 7, 1999 100 $ 45,000 $ 0 $ 0 $ 45,000
ADJUSTMENT TO RECORD CAPITAL
TRANSACTION
(NOTE 2) 26,083,842 (14,416) 1,016 0 (13,400)
ISSUANCE OF SHARES FOR SERVICES
(NOTE 3) 5,000,000 500 9,999,500 0 10,000,000
NET LOSS FOR THE PERIOD ENDED
DECEMBER 31, 1999 0 0 0 (651,920) (651,920)
================================================================================
BALANCE,
DECEMBER 31, 1999 31,083,942 31,084 10,000,516 (651,920) 9,379,680
ISSUANCE OF SHARES FOR CASH
AT $1.75 PER SHARE
(NOTE 7) 69,000 69 120,681 0 120,750
CONVERSION OF STOCKHOLDERS' LOANS
AT $1.75 PER SHARE
(NOTE 7) 399,000 399 697,851 0 698,250
ISSUANCE OF SHARES FOR SERVICES
AT $2.00 PER SHARE
(NOTE 7) 600,000 600 1,199,400 0 1,200,000
ISSUANCE OF SHARES FOR CASH
AT $0.40 PER SHARE
(NOTE 7) 290,000 290 115,710 0 116,000
NET LOSS FOR THE PERIOD ENDED
JUNE 30, 2000 0 0 0 (12,016,600) (12,016,660)
================================================================================
BALANCE, JUNE 30, 2000
(UNAUDITED) 32,441,942 $ 32,442 $12,134,158 $(12,668,520) $ (501,920)
================================================================================
See accompanying notes to consolidated financial statements
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Six month period ended June 30, 2000
(Unaudited - Prepared by Management)
legalopinion.com was incorporated under the laws of the State of Nevada on July
28, 1999. The Company's predecessor, Eurotronics Holdings Incorporated, was
incorporated under the laws of the State of Utah. Eurotronics Holdings was
formed for the primary purpose of investigating and evaluating prospective
mineral properties for possible acquisition, although it existed only as a
non-operating shell corporation with nominal assets until August 9, 1999.
Effective August 9, 1999, the Company acquired 100% of the outstanding capital
stock of legalopinion.com, Inc., a corporation incorporated on April 7, 1999
under the laws of Alberta, Canada. Prior to the acquisition, legalopinion.com
was a non-operating public shell corporation with nominal net assets. For
accounting purposes this transaction has been accounted for as a
recapitalization of legalopinion.com, Inc. (see note 2). As part of a capital
transaction with legalopinion.com, Inc., Eurotronics Holdings merged into the
Company to change its state of incorporation from Utah to Nevada and to change
its principal activity to the development of an online directory service that
provides consumers and attorneys the ability to interact.
1. SIGNIFICANT ACCOUNTING POLICIES:
a) Going concern
These financial statements have been prepared on a going concern basis, which
assumes the realization of assets and liquidation of liabilities in the normal
course of business. As shown in the consolidated financial statements, the
Company has generated insignificant revenues and has accumulated a deficit since
inception of $12,668,520. This factor, among others raises substantial doubt
about the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on its ability to generate
future profitable operations and receive continued financial support from its
stockholders and other investors.
Management's plans for generating future profitable operations include
acquisitions of compatible companies (see note 9), advertising joint ventures
and developing products and services.
Management intends to raise additional funds for operations through debt or
equity financings, including the issuance of warrants and convertible debentures
(see note 9), in addition to obtaining additional funds in the form of
stockholders loans.
b) Translation of financial statements
The Company's wholly owned subsidiary, legalopinion.com, Inc. operates in the
United States and Canada and accordingly, a portion of its operations are
conducted in Canadian currency. The method of translation applied is as follows:
i) Monetary assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn. $1.48 at June 30, 2000
(US $1.00 per Cdn. $1.44 at Dec. 31, 1999).
ii) Non-monetary assets and liabilities are translated at the rate of
exchange in effect at the time of acquisition of the assets or assumption of the
liabilities.
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Six month period ended June 30, 2000
(Unaudited - Prepared by Management)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
iii) Revenues and expenses are translated at the exchange rate in effect
at the transaction date.
iv) Foreign exchange gains and losses on translation are included in income.
c) Basis of presentation and consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All material inter-company transactions and
balances have been eliminated. Since inception to June 30, 2000, the Company has
been focused primarily on the process of developing its business and no
significant revenues have been generated to date. Accordingly, the Company is
considered to be a development state enterprise for financial reporting
purposes.
d) Fixed assets
Fixed assets are recorded at cost. Depreciation is provided using the following
methods and annual rates which are intended to amortize the cost of the assets
over their estimated useful life:
__________________________________________________________
Asset Method Rate
----------------------------------------------------------
Computer equipment Declining balance 30%
Furniture and fixtures Declining balance 20%
e) Income taxes
The Company accounts for income taxes by the asset and liability method. Under
the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
f) Management estimates
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
g) Financial instruments
The fair values of the Company's cash and accounts payable and accrued
liabilities approximate their carrying values due to the relatively short
periods to maturity of the instruments. It is not possible to arrive at a fair
value for stockholders' loans as a maturity date is not determinable, a
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Six month period ended June 30, 2000
(Unaudited - Prepared by Management)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
ready market for such instruments is not available and given the nature of the
relationship between the stockholder and the Company. The maximum credit risk
exposure for all financial assets is the carrying amount of those assets.
h) Loss per share.
Loss per share has been calculated using the weighted average number of common
shares outstanding during the period.
i) Accounting standards change.
In June 1998, the Financial Accounting Standards Board issued SFAS no. 133,
"Accounting for Derivative Instruments and Hedging Activities." Adoption of this
statement is not expected to have a significant impact on the Company's results
of operations or financial position.
2. CAPITAL TRANSACTION:
Effective August 9, 1999, the Company acquired 100% of the outstanding common
stock of legalopinion.com, Inc., a corporation incorporated on April 7, 1999
under the laws of Alberta, Canada, for cash consideration of $100,000 and the
issuance of 9,000,000 shares of the Company's common stock from treasury. The
transaction was accounted for as if it were a capital transaction, effectively
as if legalopinion.com, Inc. had issued shares for the net assets of the
Company. Accordingly, this transaction was measured at the carrying amount of
the assets and liabilities of the Company with the excess of the carrying amount
reflected as a charge to operations in the period ended December 31, 1999.
3. PREPAID EXPENSES:
The Company entered into an agreement with an advertising service provider under
which the advertising service provider agreed to provide advertising services in
exchange for common stock of the Company. As of June 30, 2000, 5,000,000 shares
of common stock were issued to the advertising service provider. This
transaction was recorded as a prepaid expense of $10,000,000, the estimated fair
value of the advertising services to be received. The Company has expensed
$7,263,075 of the advertising services to June 30, 2000. The Company intends to
terminate this agreement, however, the advertising service provider will remain
obligated to provide advertising services until the full value of advertising
services provided is equal to $10,000,000 (Note 9). Accordingly, the remaining
prepaid amount of $1,273,925 was expensed during the period ended June 30, 2000.
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Six month period ended June 30, 2000
(Unaudited - Prepared by Management)
4. FIXED ASSETS:
June 30, December 31,
2000 1999
--------------------------------------------------------------------------------
Accumulated Net book Net book
Cost amortization value value
--------------------------------------------------------------------------------
Computer equipment $ 30,022 $ 7,383 $ 22,639 $ 22,273
Furniture and fixtures 6,449 797 5,652 3,285
--------------------------------------------------------------------------------
$ 36,471 $ 8,180 $ 28,291 $ 25,558
5. STOCKHOLDERS' LOANS:
Stockholders' loans are unsecured, do not bear interest and have no specified
terms of repayment. As the stockholders have indicated in writing that they will
not request repayment in the next fiscal year, the entire amount has been shown
as a long-term liability.
6. RELATED PARTY TRANSACTION
During the six month period ended June 30, 2000, the Company paid management
fees of $46,646 to a corporation controlled by the former president of the
Company.
7. SHARES ISSUANCES:
On April 11, 2000, the Company issued 468,000 shares of common stock at $1.75
per share pursuant to a private placement. The company received $120,576 in
cash and $698,250 of shareholder loans were forgiven in exchange for the shares.
In addition, the recipients of securities in the private placement received
warrants to purchase an additional 468,000 shares of common stock.
During the period ended June 30, 2000, the Company received advertising services
from an unrelated party. In exchange for these services, the Company issued
600,000 shares of common stock at a price of $2.00 per share, being the market
value of the common stock at the issue date. The value of the shares issued,
aggregating $1,200,000, was equivalent to the fair value of the services
provided.
During the period ended June 30, 2000, the Company issued 290,000 shares of
common stock at $0.40 per share pursuant to a private placement. The company
received $116,000 in cash in exchange for the shares. In addition, the
recipients of securities in the private placement received warrants to purchase
an addition 145,000 shares of common stock. The exercise amount of $1.00 per
share expires on December 31, 2000 and the exercise amount of $1.50 per share
expires on June 30, 2001.
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LEGALOPINION.COM
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Six month period ended June 30, 2000
(Unaudited - Prepared by Management)
8. INCOME TAXES:
At December 31, 1999, the Company had a net operating loss carry forward for
United States income tax purposes of approximately $1,300,000 and a non-capital
loss carry forward for Canadian income tax purposes of approximately $600,000.
The net operating loss and non-capital loss carry forward expire in increments
beginning in 2000 and 2006 respectively. No amount has been reflected on the
balance sheet for future income taxes as any future income tax asset has been
fully offset by a valuation allowance.
9. SUBSEQUENT EVENTS:
On July 23, 2000, the Company entered into a non-binding letter of intent to
acquire all of the outstanding capital stock of the Lawyers Home Page Network
("LHN") in exchange for 4,000,000 shares of the Company's common stock. If the
transaction is consummated, it is anticipated that the Company would also issue
additional shares under an incentive schedule based upon future gross revenue
levels. Consummation of the transaction is contingent upon the negotiation and
execution of a definitive acquisition agreement, among other things. LHN is a
comprehensive provider of web-based products and services for legal
professionals.
In July 2000, the Company entered into a non binding letter of intent to enter
into a joint venture with the law firm of Teran & Teran to design a Spanish
language version of the Company's website. Consummation of the transaction is
contingent upon the negotiation and execution of a definitive agreement, among
other things.
In August of 2000, the Company intends to terminate its agreement with an
advertising service provider. As described in Note 3, the Company issued
5,000,000 shares of common stock which was recorded as a prepaid expense of
$10,000,000 based on the estimated fair value of the advertising services to be
received.
In August of 2000, the Company anticipates that it will enter into a securities
purchase agreement under which the Company would issue $500,000 in aggregate
principal amount of 6% convertible debentures for $500,000 in cash. It is
anticipated that the debentures would be convertible into common stock at a
price per share of 120% of the closing bid price on the date the debentures are
issued or 80% of the average closing price at the time of the conversion. The
issuance of the debentures is subject to the execution of a definitive
agreement, among other things. On August 11, 2000, the company received
$500,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General
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Prior to August 9, 1999, we were a non-operating public shell corporation with
nominal net assets. We were not an operating entity until October 31, 1999,
although we regard April 7, 1999, the date our Alberta, Canada subsidiary was
formed, as the date of inception of our operations. From our inception until
December 31, 1999, we were engaged in start-up activities and incurred
approximately $ 652,359 of operating expenses. These operating expenses
consisted of investments in technology, personnel, and limited marketing
efforts. We generated only $439 of revenue for the period from April 7, 1999 to
December 31, 1999. Therefore, comparison of current periods with previous
periods would not provide a meaningful or useful analysis of our financial
results.
(a) Plan of Operation for the next twelve months.
(1) Cash Requirements and of Need for additional funds, twelve months. In order
for the Company to carry out and institute its business plan to provide new
services and programs and to continue to attract consumers to its Web site,
additional funds will be needed. Over the next 12 months we anticipate that the
Company will require up to $3,000,000 to institute these new programs and
services. Approximately $1,000,000 will be utilized in establishing new
business-to-business (B2B) marketing teams, $1,000,000 will be needed for new
product and program development and $1,000,000 will be needed for infrastructure
equipment and working capital. Management believes that as much as $3,000,000
more capital will be required in the second year of the business plan. We
intend to continue to invest heavily in marketing and promotion, technology and
personnel. When possible, we attempt to do this through an exchange of services
or the issuances of our securities.
We have generated insignificant revenues and have accumulated a deficit of
$12,668,520 from inception to June 30, 2000. This factor, among others raises
substantial doubt about our ability to continue as a going concern. Our future
capital requirements will depend on many factors, including but not limited to,
results of operations and the availability of additional financing. To the
extent that existing resources and future earnings are insufficient to fund our
activities, we will need to raise additional funds through debt or equity
financings. We cannot assure you that such additional financing will be
available or that, if available, it can be obtained on terms favorable to us and
our stockholders. In addition, any equity financing could result in dilution to
our stockholders. Our inability to obtain adequate funds would adversely affect
our operations and ability to implement our business strategy. However,
management is aggressively committed to achieving these goals.
To secure the necessary funding, the Company will continue to seek additional
sources of funds through debt or equity financings. In August of 2000, we
anticipate that the Company will enter into a securities purchase agreement
under which the Company would issue $500,000 in aggregate principal amount of
6% convertible debentures for $ 500,000. The holder of the debenture may convert
at any time to common stock at a price per share of 120% of the closing bid
11
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price on the date the debentures were issued or 80 % of the average closing
price at the time of conversion. On August 11, 2000, we received $ 500,000. We
anticipate raising as much as $10,000,000 in convertible debentures over the
next three years.
The Company has redefined it's business model to include the development of
additional profit centers and programs which are intended to bring a consistent
stream of users to the Company's website. The Company depends on visitors to
its website for revenues. To improve traffic to the website, it is anticipated
that strategic alliances and joint ventures will supplement direct sales efforts
through the Company's targeted media campaign. For example, on July 23, 2000,
the Company entered into a non-binding Letter of Intent to acquire all of the
outstanding capital stock of the Lawyers Home Page Network ("LHN") in exchange
for 4,000,000 shares of the Company's common stock. If the transaction is
consummated, it is anticipated that the Company would also issue additional
shares under an incentive schedule based upon future gross revenue levels.
Consummation of the transaction is contingent upon the negotiation and execution
of a definitive acquisition agreement, among other things. LHN is a
comprehensive provider of web-based products and services for legal
professionals. In addition, we have entered into another non binding letter of
intent to enter into a joint venture with the law firm of Teran & Teran to
design a Spanish language version of our Company's website. Consummation of the
transaction is contingent upon the negotiation and execution of a definitive
agreement, among other things.
Management estimates that the Company will need at least $5 million over the
next two years in order to establish a direct business-to-business regional
sales force, introduce new products and programs, develop the corporate
infrastructure to support such activities and build a revenue stream sufficient
to operate profitably.
As a result of traffic to the Company's website during the second quarter of
2000 being substantially below original goals, the Company intends to terminate
its agreement with an advertising service provider in August of 2000. Under the
agreement, we are committed to issuing an additional $ 32,000,000 shares of
common stock for advertising services. The company will terminate this
agreement and seek to obtain advertising from other sources. The Company
intends to do this through an exchange of services or the issuances of
additional securities. Advertising will be focused upon five regional US
markets with relatively high concentration of Internet users, namely California,
Florida, Texas, New York and Washington. New collateral marketing pieces and
promotional programs targeted at small to mid-sized business users will focus
our sales efforts on growing the business-to-business (B2B) internet niche in
conjunction with new product and services programs.
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(2) Summary of Product Research and Development. As the Company's software and
website have already been completed and the majority of the development work is
complete, on-going changes and enhancements may be made as the Company receives
feedback from both lawyers and consumers and to accommodate new programs and
services. We are planning to expand to provide further services, including
LegalCare, a prepaid legal services benefits package that could be offered by
employers to their employees, and Taxpert, a tax law offshoot of our existing
online legal opinion service.
(3) Expected purchase or sale of plant and significant equipment. We do not
anticipate making any significant purchases or sales of plant and equipment
within the next 12 months.
(4) Expected significant change in the number of employees. We anticipate that
we will staff eight new positions within the next 12 months. Further employees
may be required if demand increases significantly for customer support and
sales.
(b) Discussion and Analysis of Financial Condition and Results of Operations.
As discussed above, our Company was not an operating entity, until the last half
of 1999. Therefore, comparison of current periods with corresponding previous
periods would not be meaningful or useful, in the judgment of management. After
the acquisition of our current business on August 9, 1999, the Company continued
to incur expenses to develop our website. No revenues were generated until after
the site became operational on October 31, 1999. Only $439 was generated from
that time until year-end, December 31, 1999.
For the quarter ending June 30, 2000, the Company had total expenses of
$8,821,133 of which $8,276,541 was for the initial advertising and promotion of
the website. $8,224,828 of this advertising and promotion expense was a non-cash
expense as a result of stock-for-adverting transactions. Additional expenses
were generated from investor relations of $ 281,412, the development and
maintenance of the website of $46,829, attorney directory enrollment of $23,607
and general and administrative expenses of $192,744 which is detailed within the
accompanying financial statements. The revenues from the first quarter of 2000
were only $4,981. Therefore, the net loss for the quarter was $8,816,152. The
Company believes that the reason for such a modest result must largely be seen
in terms of the lack of effective advertising in the past.
During the quarter ending June 30, 2000, $698,250 of shareholders' loans
were converted to common stock in a private placement based on a $1.75 per share
price. This financing raised $120,750 in addition to the conversion of the
stockholders' loans. The Company also raised $116,600 upon the issuance of
290,000 shares in another private placement at $ .40 per share. During the
quarter ending June 30, 2000, the Company also issued, in exchange for
advertising services, 600,000 common shares at a price of $ 2.00 per share.
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During the six months ending June 30, 2000, the Company's total expenses
were $12,025,456 of which $11,283,337 was for the initial advertising and
promotion of the website. $ 11,200,000 was a non-cash expense as a result of a
stock-for-advertising transactions. Additional expenses were investor relations
of $ 309,455, website development and maintenance of $75,963, attorney directory
enrollment of $ 58,432 and general and administrative expenses of $ 298,269
which is detailed within the accompanying financial statements. The revenues
were $ 8,856 resulting in a net loss of $12,016,600. As referred to above, the
modest results must largely be seen in terms of the lack of effective
advertising in the past.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
15
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LEGALOPINION.COM
Dated: August 14, 2000 By
/s/John Marencik
John Marencik, President
(Chief Executive Officer)
By
/s/David Emerick
David Emerick
Chief Financial Officer
(Principal Financial Officer)
16
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